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2010 1040 Tax Form

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2010 1040 Tax Form

2010 1040 tax form Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). 2010 1040 tax form Low Income Taxpayer Clinics (LITCs). 2010 1040 tax form Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. 2010 1040 tax form All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. 2010 1040 tax form The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). 2010 1040 tax form After notice and hearing, the bankruptcy court may extend the period for another 30 days. 2010 1040 tax form Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. 2010 1040 tax form Note. 2010 1040 tax form Individual debtors should use their home address when filing Form 1040 with the IRS. 2010 1040 tax form Returns should not be filed “in care of” the trustee's address. 2010 1040 tax form Ordering tax transcripts and copies of returns. 2010 1040 tax form   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. 2010 1040 tax form The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. 2010 1040 tax form If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. 2010 1040 tax form Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. 2010 1040 tax form Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. 2010 1040 tax form A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. 2010 1040 tax form To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. 2010 1040 tax form It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. 2010 1040 tax form 00 per tax return for copies of the returns. 2010 1040 tax form Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. 2010 1040 tax form If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. 2010 1040 tax form Tax returns and payment of taxes in chapter 11 cases. 2010 1040 tax form   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. 2010 1040 tax form Disclosure of debtor's return information to trustee. 2010 1040 tax form   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. 2010 1040 tax form If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. 2010 1040 tax form    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. 2010 1040 tax form Material interest is generally defined as a financial or monetary interest. 2010 1040 tax form Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 2010 1040 tax form   However, the U. 2010 1040 tax form S. 2010 1040 tax form Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. 2010 1040 tax form Disclosure of bankruptcy estate's return information to debtor. 2010 1040 tax form    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. 2010 1040 tax form Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. 2010 1040 tax form Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. 2010 1040 tax form Chapter 13 relief is not available to corporations or partnerships. 2010 1040 tax form The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. 2010 1040 tax form In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. 2010 1040 tax form S. 2010 1040 tax form Individual Income Tax Return. 2010 1040 tax form On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. 2010 1040 tax form Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. 2010 1040 tax form To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. 2010 1040 tax form See Debt Cancellation, later. 2010 1040 tax form Interest on trust accounts in chapter 13 cases. 2010 1040 tax form   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. 2010 1040 tax form This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. 2010 1040 tax form S. 2010 1040 tax form Trustee system. 2010 1040 tax form The interest is also not taxable to the trustee as income. 2010 1040 tax form Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. 2010 1040 tax form The bankruptcy estate in a chapter 7 case is represented by a trustee. 2010 1040 tax form The trustee is appointed to administer the estate and liquidate any nonexempt assets. 2010 1040 tax form In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. 2010 1040 tax form However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. 2010 1040 tax form During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. 2010 1040 tax form The bankruptcy trustee files a Form 1041 for the bankruptcy estate. 2010 1040 tax form However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). 2010 1040 tax form Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. 2010 1040 tax form Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). 2010 1040 tax form For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 2010 1040 tax form Debtor's Election To End Tax Year – Form 1040 Short tax years. 2010 1040 tax form   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. 2010 1040 tax form If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. 2010 1040 tax form The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. 2010 1040 tax form   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. 2010 1040 tax form Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. 2010 1040 tax form    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. 2010 1040 tax form Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. 2010 1040 tax form Note. 2010 1040 tax form The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. 2010 1040 tax form Making the Election - Filing Requirements First short tax year. 2010 1040 tax form   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. 2010 1040 tax form The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. 2010 1040 tax form Second short tax year. 2010 1040 tax form   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. 2010 1040 tax form   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. 2010 1040 tax form To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. 2010 1040 tax form Example. 2010 1040 tax form Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. 2010 1040 tax form If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. 2010 1040 tax form Jane's second short year runs from May 8, 2012, through December 31, 2012. 2010 1040 tax form To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. 2010 1040 tax form To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. 2010 1040 tax form The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. 2010 1040 tax form S. 2010 1040 tax form Individual Tax Return. 2010 1040 tax form The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. 2010 1040 tax form The debtor must file Form 4868 by the due date of the return for the first short tax year. 2010 1040 tax form The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. 2010 1040 tax form Election by debtor's spouse. 2010 1040 tax form   If the debtor is married, the debtor's spouse may join in the election to end the tax year. 2010 1040 tax form If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. 2010 1040 tax form The debtor must elect by the due date for filing the return for the first short tax year. 2010 1040 tax form Once the election is made, it cannot be revoked for the first short tax year. 2010 1040 tax form However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. 2010 1040 tax form Later bankruptcy of spouse. 2010 1040 tax form    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. 2010 1040 tax form   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. 2010 1040 tax form If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. 2010 1040 tax form However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. 2010 1040 tax form The debtor and the spouse are precluded from this election because they have different tax years. 2010 1040 tax form This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. 2010 1040 tax form Example 1. 2010 1040 tax form Paul and Mary Harris are calendar-year taxpayers. 2010 1040 tax form Paul's voluntary chapter 7 bankruptcy case begins on March 4. 2010 1040 tax form If Paul does not make an election, his tax year does not end on March 3. 2010 1040 tax form If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. 2010 1040 tax form Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. 2010 1040 tax form They must make the election by July 15, the due date for filing the joint return. 2010 1040 tax form Example 2. 2010 1040 tax form Fred and Ethel Barnes are calendar-year taxpayers. 2010 1040 tax form Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. 2010 1040 tax form Ethel could elect to end her tax year on October 31. 2010 1040 tax form If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. 2010 1040 tax form Her first tax year is January 1–October 31, and her second year is November 1–December 31. 2010 1040 tax form If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. 2010 1040 tax form If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. 2010 1040 tax form Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. 2010 1040 tax form Example 3. 2010 1040 tax form Jack and Karen Thomas are calendar-year taxpayers. 2010 1040 tax form Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. 2010 1040 tax form Karen elected to close her tax year on April 9 and Jack joins in Karen's election. 2010 1040 tax form Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. 2010 1040 tax form The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. 2010 1040 tax form Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). 2010 1040 tax form If Karen does join in, she would have the same 3 short tax years as Jack. 2010 1040 tax form Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. 2010 1040 tax form Annualizing taxable income. 2010 1040 tax form   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. 2010 1040 tax form See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. 2010 1040 tax form Dismissal of bankruptcy case. 2010 1040 tax form   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. 2010 1040 tax form It is as if no bankruptcy estate was created for tax purposes. 2010 1040 tax form In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. 2010 1040 tax form Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. 2010 1040 tax form Attach a statement to the amended returns explaining why the debtor is filing an amended return. 2010 1040 tax form Taxes and the Bankruptcy Estate Property of the bankruptcy estate. 2010 1040 tax form   At the commencement of a bankruptcy case a bankruptcy estate is created. 2010 1040 tax form Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. 2010 1040 tax form This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. 2010 1040 tax form However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. 2010 1040 tax form Note. 2010 1040 tax form Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. 2010 1040 tax form Excluded property is never included in the estate. 2010 1040 tax form Transfer of assets between debtor and bankruptcy estate. 2010 1040 tax form   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. 2010 1040 tax form The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. 2010 1040 tax form For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. 2010 1040 tax form The estate assumes the same basis, holding period, and character of the transferred assets. 2010 1040 tax form Also, the estate generally accounts for the transferred assets in the same manner as debtor. 2010 1040 tax form   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. 2010 1040 tax form The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. 2010 1040 tax form Abandoned property. 2010 1040 tax form    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. 2010 1040 tax form If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. 2010 1040 tax form Separate taxable entity. 2010 1040 tax form   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. 2010 1040 tax form The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. 2010 1040 tax form S. 2010 1040 tax form Income Tax Return for Estates and Trusts, and paying its taxes. 2010 1040 tax form The debtor remains responsible for filing his or her own returns on Form 1040, U. 2010 1040 tax form S. 2010 1040 tax form Individual Income Tax Return, and paying taxes on income that does not belong to the estate. 2010 1040 tax form Employer identification number. 2010 1040 tax form   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 2010 1040 tax form The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 2010 1040 tax form See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 2010 1040 tax form    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 2010 1040 tax form Income, deductions, and credits – Form 1040. 2010 1040 tax form   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). 2010 1040 tax form Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. 2010 1040 tax form The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. 2010 1040 tax form See Debt Cancellation, below. 2010 1040 tax form Note. 2010 1040 tax form The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. 2010 1040 tax form Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. 2010 1040 tax form However, other exclusions, such as the insolvency exclusion, may apply. 2010 1040 tax form Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. 2010 1040 tax form    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. 2010 1040 tax form Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. 2010 1040 tax form   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. 2010 1040 tax form Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. 2010 1040 tax form Income of the estate in individual chapter 11 cases. 2010 1040 tax form    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. 2010 1040 tax form Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. 2010 1040 tax form S. 2010 1040 tax form C. 2010 1040 tax form section 1115). 2010 1040 tax form Note. 2010 1040 tax form A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. 2010 1040 tax form Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). 2010 1040 tax form Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. 2010 1040 tax form See Administrative expenses, below. 2010 1040 tax form Conversion or dismissal of chapter 11 cases. 2010 1040 tax form   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. 2010 1040 tax form If the chapter 11 case is converted to a chapter 7 case, 11 U. 2010 1040 tax form S. 2010 1040 tax form C. 2010 1040 tax form section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. 2010 1040 tax form Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. 2010 1040 tax form If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. 2010 1040 tax form Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. 2010 1040 tax form Note. 2010 1040 tax form Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). 2010 1040 tax form Administrative expenses. 2010 1040 tax form   Allowable expenses include administrative expenses. 2010 1040 tax form    Administrative expenses can only be deducted by the estate, never by the debtor. 2010 1040 tax form   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. 2010 1040 tax form These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. 2010 1040 tax form See IRC section 67(e). 2010 1040 tax form Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. 2010 1040 tax form Note. 2010 1040 tax form The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. 2010 1040 tax form See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. 2010 1040 tax form Administrative expense loss. 2010 1040 tax form   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. 2010 1040 tax form The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. 2010 1040 tax form The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. 2010 1040 tax form For a discussion of NOLs, see Publication 536. 2010 1040 tax form Attribute carryovers. 2010 1040 tax form   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. 2010 1040 tax form These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. 2010 1040 tax form The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. 2010 1040 tax form   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. 2010 1040 tax form See Debt Cancellation, later. 2010 1040 tax form   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. 2010 1040 tax form The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. 2010 1040 tax form Note. 2010 1040 tax form The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. 2010 1040 tax form See Administrative expense loss, above. 2010 1040 tax form Passive and at-risk activities. 2010 1040 tax form   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. 2010 1040 tax form Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. 2010 1040 tax form These transfers include the return of exempt property and abandonment of estate property to the debtor. 2010 1040 tax form Carrybacks from the debtor's activities. 2010 1040 tax form   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. 2010 1040 tax form Carrybacks from the bankruptcy estate. 2010 1040 tax form   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. 2010 1040 tax form The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. 2010 1040 tax form Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. 2010 1040 tax form    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. 2010 1040 tax form The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. 2010 1040 tax form These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. 2010 1040 tax form The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. 2010 1040 tax form The same method must be used to allocate the income and the withheld tax. 2010 1040 tax form Example. 2010 1040 tax form If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. 2010 1040 tax form Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. 2010 1040 tax form See IRC section 31(a). 2010 1040 tax form   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. 2010 1040 tax form In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. 2010 1040 tax form    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. 2010 1040 tax form The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. 2010 1040 tax form Note. 2010 1040 tax form The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). 2010 1040 tax form   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. 2010 1040 tax form Self-employment taxes in individual chapter 11 cases. 2010 1040 tax form   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. 2010 1040 tax form Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. 2010 1040 tax form   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. 2010 1040 tax form Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. 2010 1040 tax form This schedule includes self-employment income earned post-petition and the attributable deductions. 2010 1040 tax form The debtor must pay any self-employment tax imposed by IRC section 1401. 2010 1040 tax form Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. 2010 1040 tax form   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. 2010 1040 tax form However, section 1115 of the Bankruptcy Code (11 U. 2010 1040 tax form S. 2010 1040 tax form C. 2010 1040 tax form section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. 2010 1040 tax form See Notice 2006-83. 2010 1040 tax form   The reporting and withholding obligations of a debtor's employer also do not change. 2010 1040 tax form An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. 2010 1040 tax form Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. 2010 1040 tax form   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. 2010 1040 tax form See IRC section 6109(a)(2). 2010 1040 tax form As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). 2010 1040 tax form   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. 2010 1040 tax form See Notice 2006-83. 2010 1040 tax form An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. 2010 1040 tax form   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. 2010 1040 tax form However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. 2010 1040 tax form See Employment Tax Regulations section 31. 2010 1040 tax form 3402(f)(2)-1. 2010 1040 tax form Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. 2010 1040 tax form See IRC section 6654(a). 2010 1040 tax form Notice required in converted and dismissed cases. 2010 1040 tax form   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. 2010 1040 tax form The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. 2010 1040 tax form This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. 2010 1040 tax form   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. 2010 1040 tax form Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. 2010 1040 tax form However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. 2010 1040 tax form After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. 2010 1040 tax form Employment taxes. 2010 1040 tax form   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 2010 1040 tax form See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. 2010 1040 tax form   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 2010 1040 tax form For a further discussion of employment taxes, see Employment Taxes, later. 2010 1040 tax form Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . 2010 1040 tax form The bankruptcy court case number is . 2010 1040 tax form Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. 2010 1040 tax form   Year Taxpayer   Estate 1. 2010 1040 tax form Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. 2010 1040 tax form Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. 2010 1040 tax form Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. 2010 1040 tax form Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. 2010 1040 tax form   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. 2010 1040 tax form This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. 2010 1040 tax form   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). 2010 1040 tax form   These amounts are generally adjusted annually. 2010 1040 tax form See the present year Form 1041 Instructions at www. 2010 1040 tax form irs. 2010 1040 tax form gov/form1041 for the current dollar amounts. 2010 1040 tax form Accounting period. 2010 1040 tax form   A bankruptcy estate may have a fiscal year. 2010 1040 tax form However, this period cannot be longer than 12 months. 2010 1040 tax form Change of accounting period. 2010 1040 tax form   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. 2010 1040 tax form This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. 2010 1040 tax form The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. 2010 1040 tax form Employer identification number. 2010 1040 tax form   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 2010 1040 tax form The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 2010 1040 tax form    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 2010 1040 tax form   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. 2010 1040 tax form irs. 2010 1040 tax form gov/businesses/small. 2010 1040 tax form The EIN is issued immediately once the application information is validated. 2010 1040 tax form By telephone at 1-800-829-4933 from 7:00 a. 2010 1040 tax form m. 2010 1040 tax form to 7:00 p. 2010 1040 tax form m. 2010 1040 tax form in the trustee's or debtor-in-possession's local time zone. 2010 1040 tax form Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. 2010 1040 tax form   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. 2010 1040 tax form For more details, see Pub. 2010 1040 tax form 583, Starting a Business and Keeping Records. 2010 1040 tax form   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. 2010 1040 tax form Figuring tax due. 2010 1040 tax form   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. 2010 1040 tax form However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. 2010 1040 tax form The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. 2010 1040 tax form The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. 2010 1040 tax form Tax rate schedule. 2010 1040 tax form The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. 2010 1040 tax form When to file. 2010 1040 tax form   Calendar year bankruptcy estates must file Form 1041 by April 15th. 2010 1040 tax form Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. 2010 1040 tax form For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. 2010 1040 tax form If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. 2010 1040 tax form Note. 2010 1040 tax form The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. 2010 1040 tax form Transmittal for Form 1040. 2010 1040 tax form   Form 1041 is used as a transmittal for Form 1040. 2010 1040 tax form If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. 2010 1040 tax form   Prepare the bankruptcy estate's return by completing Form 1040. 2010 1040 tax form In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. 2010 1040 tax form ” Then, attach Form 1040 to the Form 1041 transmittal. 2010 1040 tax form Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. 2010 1040 tax form An example of a bankruptcy estate's tax return is prepared below. 2010 1040 tax form Note. 2010 1040 tax form The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. 2010 1040 tax form Payment of Tax Due Payment methods. 2010 1040 tax form   Payment of tax due may be made by check or money order or by credit or debit card. 2010 1040 tax form For information on how to make payments electronically by credit or debit card, go to irs. 2010 1040 tax form gov/e-pay. 2010 1040 tax form      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. 2010 1040 tax form To enroll in EFTPS, go to eftps. 2010 1040 tax form gov or call 1-800-555-4477. 2010 1040 tax form For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. 2010 1040 tax form Payment voucher – Form 1041-V. 2010 1040 tax form   Form 1041-V accompanies payments made by check or money order for Form 1041. 2010 1040 tax form The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. 2010 1040 tax form Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. 2010 1040 tax form We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. 2010 1040 tax form Estimated tax – Form 1041-ES. 2010 1040 tax form   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. 2010 1040 tax form See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. 2010 1040 tax form Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 2010 1040 tax form Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. 2010 1040 tax form If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. 2010 1040 tax form   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. 2010 1040 tax form Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. 2010 1040 tax form The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 2010 1040 tax form If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 2010 1040 tax form , with their individual income tax returns. 2010 1040 tax form Tax Return Example – Form 1041 This publication is not revised annually. 2010 1040 tax form Future changes to the forms and their instructions may not be reflected in this example. 2010 1040 tax form Note. 2010 1040 tax form The following return was prepared for tax year 2011. 2010 1040 tax form In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). 2010 1040 tax form Facts and circumstances. 2010 1040 tax form   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. 2010 1040 tax form Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. 2010 1040 tax form   The estate received the following assets from Mr. 2010 1040 tax form Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. 2010 1040 tax form   Also, the estate received a $251,500 capital loss carryover. 2010 1040 tax form   Mr. 2010 1040 tax form Smith's bankruptcy case was closed on December 31, 2011. 2010 1040 tax form During 2011, Mr. 2010 1040 tax form Smith was relieved of $70,000 of debt by the bankruptcy court. 2010 1040 tax form The estate chose a calendar year as its tax year. 2010 1040 tax form Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. 2010 1040 tax form Schedule B (Form 1040). 2010 1040 tax form    The certificate of deposit earned $5,500 of interest during 2011. 2010 1040 tax form Joan reports this interest on Schedule B. 2010 1040 tax form She completes this schedule and enters the result on Form 1040. 2010 1040 tax form Form 4562. 2010 1040 tax form   Joan enters the depreciation allowed on Form 4562. 2010 1040 tax form She completes the form and enters the result on Schedule E. 2010 1040 tax form Schedule E (Form 1040). 2010 1040 tax form   The commercial real estate was rented through the date of sale. 2010 1040 tax form Joan reports the income and expenses on Schedule E. 2010 1040 tax form She enters the net income on Form 1040. 2010 1040 tax form Form 4797. 2010 1040 tax form   The commercial real estate was sold on July 1, 2011, for $280,000. 2010 1040 tax form The property was purchased in 2001 at a cost of $250,000. 2010 1040 tax form The total depreciation allowable as of the date of sale was $120,000. 2010 1040 tax form Additionally, $25,000 of selling expenses were incurred. 2010 1040 tax form Joan reports the gain or loss from the sale on Form 4797. 2010 1040 tax form She completes the form and enters the gain on Schedule D (Form 1040). 2010 1040 tax form   Mr. 2010 1040 tax form Smith's former residence was sold on September 30, 2011. 2010 1040 tax form The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. 2010 1040 tax form This sale is excluded from gross income under IRC section 121. 2010 1040 tax form Note. 2010 1040 tax form Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). 2010 1040 tax form Bankruptcy estates succeed to this exclusion at the commencement of the case. 2010 1040 tax form See Regulation section 1. 2010 1040 tax form 1398-3. 2010 1040 tax form Schedule D (Form 1040). 2010 1040 tax form   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). 2010 1040 tax form She enters the results on Form 1040. 2010 1040 tax form Form 1040, page 1. 2010 1040 tax form   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. 2010 1040 tax form Schedule A (Form 1040). 2010 1040 tax form   During 2011, the estate paid mortgage interest and real property tax on Mr. 2010 1040 tax form Smith's former residence. 2010 1040 tax form It also paid income tax to the state. 2010 1040 tax form Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. 2010 1040 tax form Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. 2010 1040 tax form She completes the Schedule A and enters the result on page 2 of Form 1040. 2010 1040 tax form Form 1040, page 2. 2010 1040 tax form   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. 2010 1040 tax form She then enters the estate's estimated tax payments and figures the amount the estate still owes. 2010 1040 tax form Form 982. 2010 1040 tax form   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. 2010 1040 tax form Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. 2010 1040 tax form See Debt Cancellation, later. 2010 1040 tax form After the bankruptcy case ends, Mr. 2010 1040 tax form Smith will assume the estate's tax attributes. 2010 1040 tax form Mr. 2010 1040 tax form Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). 2010 1040 tax form Note. 2010 1040 tax form If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. 2010 1040 tax form Form 1041. 2010 1040 tax form   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. 2010 1040 tax form She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. 2010 1040 tax form This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Schedule A This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Schedule B This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Schedule D This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Schedule E This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 2119 This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 4562 This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. 2010 1040 tax form Please click the link to view the image. 2010 1040 tax form Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. 2010 1040 tax form Otherwise, you do not have any carryovers. 2010 1040 tax form 1. 2010 1040 tax form Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. 2010 1040 tax form If a loss, enclose the amount in parentheses 1. 2010 1040 tax form 19,880   2. 2010 1040 tax form Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. 2010 1040 tax form 1,500   3. 2010 1040 tax form Combine lines 1 and 2. 2010 1040 tax form If zero or less, enter -0- 3. 2010 1040 tax form 21,380   4. 2010 1040 tax form Enter the smaller of line 2 or line 3 4. 2010 1040 tax form 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. 2010 1040 tax form       5. 2010 1040 tax form Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. 2010 1040 tax form 0   6. 2010 1040 tax form Enter any gain from your 2010 Schedule D, line 15. 2010 1040 tax form If a loss, enter -0- 6. 2010 1040 tax form         7. 2010 1040 tax form Add lines 4 and 6 7. 2010 1040 tax form 1,500   8. 2010 1040 tax form Short-term capital loss carryover for 2011. 2010 1040 tax form Subtract line 7 from line 5. 2010 1040 tax form If zero or less, enter -0-. 2010 1040 tax form If more than zero, also enter this amount on Schedule D, line 6 8. 2010 1040 tax form 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. 2010 1040 tax form       9. 2010 1040 tax form Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. 2010 1040 tax form 251,500   10. 2010 1040 tax form Enter any gain from your 2010 Schedule D, line 7. 2010 1040 tax form If a loss, enter -0- 10. 2010 1040 tax form 0       11. 2010 1040 tax form Subtract line 5 from line 4. 2010 1040 tax form If zero or less, enter -0- 11. 2010 1040 tax form 1,500       12. 2010 1040 tax form Add lines 10 and 11 12. 2010 1040 tax form 1,500   13. 2010 1040 tax form Long-term capital loss carryover for 2011. 2010 1040 tax form Subtract line 12 from line 9. 2010 1040 tax form If zero or less, enter -0-. 2010 1040 tax form If more than zero, also enter this amount on Schedule D, line 14 13. 2010 1040 tax form 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. 2010 1040 tax form The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. 2010 1040 tax form In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. 2010 1040 tax form The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. 2010 1040 tax form Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. 2010 1040 tax form However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. 2010 1040 tax form A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. 2010 1040 tax form However, It may or may not be included in the individual partners' income. 2010 1040 tax form See Partnerships, below under Debt Cancellation. 2010 1040 tax form Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. 2010 1040 tax form A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. 2010 1040 tax form The following discussion only highlights bankruptcy tax rules applying to corporations. 2010 1040 tax form The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. 2010 1040 tax form Therefore, you may wish to seek the help of a professional tax advisor. 2010 1040 tax form See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. 2010 1040 tax form Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. 2010 1040 tax form However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. 2010 1040 tax form A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. 2010 1040 tax form In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. 2010 1040 tax form In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. 2010 1040 tax form Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. 2010 1040 tax form In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. 2010 1040 tax form IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. 2010 1040 tax form IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. 2010 1040 tax form In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. 2010 1040 tax form No loss is recognized in this situation. 2010 1040 tax form Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. 2010 1040 tax form To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. 2010 1040 tax form The exemption request must be submitted to the local IRS Insolvency Office handling the case. 2010 1040 tax form The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. 2010 1040 tax form The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. 2010 1040 tax form ” The statement must be signed by the trustee, receiver or assignee. 2010 1040 tax form The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). 2010 1040 tax form The IRS will act on your request within 90 days. 2010 1040 tax form Disclosure of return information to trustee. 2010 1040 tax form   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. 2010 1040 tax form However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. 2010 1040 tax form Material interest is generally defined as a financial or monetary interest. 2010 1040 tax form Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 2010 1040 tax form Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. 2010 1040 tax form Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. 2010 1040 tax form QSFs are required to file an annual income tax return, Form 1120-SF, U. 2010 1040 tax form S. 2010 1040 tax form Income Tax Return for Settlement Funds. 2010 1040 tax form More information about QSFs may be found in Treasury Regulation sections 1. 2010 1040 tax form 468B-1 through -5. 2010 1040 tax form Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. 2010 1040 tax form After a return is filed, the IRS will either accept the return as filed or select the return for examination. 2010 1040 tax form Under examination the IRS may redetermine the tax liability shown on the return. 2010 1040 tax form If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. 2010 1040 tax form See Court Jurisdiction over Tax Matters, later. 2010 1040 tax form Prompt Determination Requests Pursuant to Rev. 2010 1040 tax form Proc. 2010 1040 tax form 2006-24, 2006-22 I. 2010 1040 tax form R. 2010 1040 tax form B. 2010 1040 tax form 943, www. 2010 1040 tax form irs. 2010 1040 tax form gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. 2010 1040 tax form irs. 2010 1040 tax form gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. 2010 1040 tax form Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). 2010 1040 tax form Making the request for determination. 2010 1040 tax form   As detailed in Rev. 2010 1040 tax form Proc. 2010 1040 tax form 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. 2010 1040 tax form O. 2010 1040 tax form Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). 2010 1040 tax form   The request must be submitted in duplicate and must be executed under penalties of perjury. 2010 1040 tax form In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. 2010 1040 tax form The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. 2010 1040 tax form The name and location of the office where the return was filed. 2010 1040 tax form The name of the debtor. 2010 1040 tax form Debtor's social security number, TIN, or EIN. 2010 1040 tax form Type of bankruptcy estate. 2010 1040 tax form Bankruptcy case number. 2010 1040 tax form Court where the bankruptcy case is pending. 2010 1040 tax form   The copy of the return(s) submitted with the request must be an exact copy of a valid return. 2010 1040 tax form A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. 2010 1040 tax form    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. 2010 1040 tax form A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. 2010 1040 tax form Examination of return. 2010 1040 tax form   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. 2010 1040 tax form If the return is selected for examination, it will be examined as soon as possible. 2010 1040 tax form The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. 2010 1040 tax form   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. 2010 1040 tax form   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. 2010 1040 tax form   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. 2010 1040 tax form Note. 2010 1040 tax form An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. 2010 1040 tax form   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei
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Tax Information For Businesses

Small Business and Self-Employed Tax Center
Access to tax information useful to small businesses with assets of $10 million or less.

Large Business and International Tax Center
This page provides links which are helpful for large to mid-size businesses with assets greater than $10 million

Work Opportunity Tax Credit Extended
Businesses, including tax-exempt employers, may qualify for the Work Opportunity Tax Credit for qualified veterans hired before January 1, 2014.

Self-Employed Individuals Tax Center
The basics on your tax responsibilities if you are self-employed or an independent contractor.

Qualifying Advanced Energy Project Credit (section 48C)
Notice 2013-12, issued February 7, 2013, announced the availability of $150,228,397 in section 48C tax credits in the Phase II allocation round in 2013. Application procedures are different than in the first allocation round.

IRS Video Portal
The IRS Video portal contains video and audio presentations on topics of interest to small businesses, individuals and tax professionals. You will find video clips of tax topics, and archived versions of live panel discussions and webinars.

Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations
The Balanced Budget and Emergency Deficit Reduction Act of 1985, as amended, requires certain spending cuts during Fiscal Year 2013 due to the sequester triggered earlier this year.

Alternative Motor Vehicle Credit
The Alternative Fuel Motor Vehicle Credit was enacted by the Energy Policy Act of 2005 and includes separate credits for four distinct categories of vehicles: Hybrid vehicles, Fuel Cell vehicles, Qualified Alternative Fuel Motor vehicles (QAFMV) and Advanced Lean Burn Technology vehicles. The amount of the potential credit varies by type of vehicle and which of the four credits applies.

Coordinated Issue Papers - LB&I
Effective January 21, 2014, all LB&I coordinated issue papers are decoordinated.  See 1/21/14 Directive from LB&I Commissioner Maloy for details.

HIRE Act: Questions and Answers for Employers
General information about the provisions of the Hiring Individuals to Restore Employment Act.

Employment Taxes
Federal income tax, Social Security and Medicare taxes, FUTA, self-employment tax and more.

Disaster Assistance and Emergency Relief for Individuals and Businesses
Special tax law provisions may help taxpayers and businesses recover financially from a disaster.

Small Business Forms and Publications
Download multiple small business and self-employed forms and publications.

e-file for Large Business and International (LB&I)
Certain large business and International (LB&I) corporations are required to electronically file their Forms 1120 and 1120S. Other corporations may do so voluntarily. This site provides e-file information for corporations that prepare and transmit their own electronic corporate income tax returns and those that use the services of third party tax professionals.

Employer ID Numbers (EINs)
Find out more on EINs or apply for one online.

Employee Tool & Equipment Plans
The Internal Revenue Service has established a compliance team to address the marketing and mistreatment of employee tool and equipment plans as tax-favored accountable plans.

Deducting Business Expenses
Find out what qualifies as a deductible business expense, including depreciation.

IRS Tax Calendar for Businesses and Self-Employed
The tax calendar is available for downloading and printing, or you can view it online.

U.S. Citizens and Resident Aliens Abroad
This section covers tax topics for U.S. citizens or resident aliens living overseas.

HCTC: Information for Health Plan Administrators (HPAs)
Health Plan Administrators are key to the success of the HCTC by providing health insurance to eligible individuals. Find information specific to health plan administrators here, including how to get involved and participate with the HCTC Program.

Excise Tax
Information about the various programs, databases, and activities within Excise Tax.

Industry Issue Resolution Program
The Industry Issue Resolution (IIR) Program resolves frequently disputed or burdensome tax issues. IRS solicits suggestions for issues for the program from taxpayers, representatives and associations.

Estate and Gift Taxes
General information on when these taxes apply and when they do not.

Filing Past Due Tax Returns
Understand how to file past due returns.

Information Returns Processing
The Information Reporting Program Website is designed to help you meet your Information Reporting Requirements. Included are help-line telephone numbers and direct links to aid you in reporting information returns. You will also find information about how to file returns electronically or magnetically.

LB&I Directives
LB&I Directives provide industry-related and administrative guidance to LB&I examiners to ensure consistent tax administration. The Directives do not establish Service position on legal issues and are not legal guidance.

Online Ordering for Information Returns and Employer Returns
Order information returns and employer returns online.

Manufacturers' Energy Efficient Appliance Credit
Act Section 305 - Modifications of Energy Efficient Appliance Credit for Appliances Produced After 2007

Audit Techniques Guides (ATGs)
These guides contain examination techniques to assist examiners in performing examinations.

1099-K Reporting Requirements for Payment Settlement Entities
Describes responsibilities of 1099-K filers and provides links to forms and publications.

Plug-In Electric Drive Vehicle Credit (IRC 30D)
Plug-In Electric Drive Vehicle Credit (IRC 30D) - Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks.

Your Guide to an IRS Small Business Audit
Video series shows small business owners steps of an audit and answers questions about the process

Income from Abroad is Taxable
There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with bank accounts in Liechtenstein. The IRS' interest, however, extends beyond bank accounts in Liechtenstein to financial accounts anywhere in the world. The IRS reminds you to report your worldwide income on your U.S. tax return and lists the possible consequences of hiding income overseas.

Quality Examination Process
The Quality Examination Process (QEP) is a systematic approach for engaging and involving Large Business and International (LB&I) taxpayers in the tax examination process, from the earliest planning stages through resolution of all issues and completion of the case.

Market Segment Understandings (MSU)
The IRS and taxpayers in particular market segments, work together to improve tax compliance.

Railroad Retirement Tax Act (RRTA) Desk Guide (January 2009)
This Desk Reference Guide is intended as a resource tool to assist Revenue Agents who are assigned the examination of a railroad employer. The Guide was prepared presuming that the reader has already received employment tax training.

Federal Payment Levy Program
Certain federal payments (OPM, SSA, federal employee salaries, and federal employee travel) disbursed by the Department of the Treasury, Financial Management Service (FMS) may be subject to a 15 percent levy through the Federal Payment Levy Program (FPLP) to pay your delinquent tax debt. Find out your appeal rights and how to resolve any dispute.

Research Credit
Guidelines and audit technique guide are provided for field examiners on the examination of Research Credit cases.

The International Tax Gap
Find resources on this page pertaining to the international tax gap — the difference between the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time. The tax gap can also be thought of as the sum of non-compliance with the tax law.

Uncertain Tax Positions - Schedule UTP
IRS finalized Schedule UTP & instructions for reporting uncertain tax positions by certain corporations.

IRS Non-Retaliation Policy
IRS has a zero-tolerance policy for retaliation and has had one in place since 1998.

Page Last Reviewed or Updated: 30-Mar-2014

The 2010 1040 Tax Form

2010 1040 tax form Publication 560 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionSEP plans. 2010 1040 tax form SIMPLE plans. 2010 1040 tax form Qualified plans. 2010 1040 tax form Ordering forms and publications. 2010 1040 tax form Tax questions. 2010 1040 tax form Future Developments For the latest information about developments related to Publication 560, such as legislation enacted after we release it, go to www. 2010 1040 tax form irs. 2010 1040 tax form gov/pub560. 2010 1040 tax form What's New Compensation limit increased for 2013 and 2014. 2010 1040 tax form  For 2013 the maximum compensation used for figuring contributions and benefits increases to $255,000. 2010 1040 tax form This limit increases to $260,000 for 2014. 2010 1040 tax form Elective deferral limit for 2013 and 2014. 2010 1040 tax form  The limit on elective deferrals, other than catch-up contributions, increases to $17,500 for 2013 and remains at $17,500 for 2014. 2010 1040 tax form These limits apply for participants in SARSEPs, 401(k) plans (excluding SIMPLE plans), section 403(b) plans and section 457(b) plans. 2010 1040 tax form Defined contribution limit increased for 2013 and 2014. 2010 1040 tax form  The limit on contributions, other than catch-up contributions, for a participant in a defined contribution plan increases to $51,000 for 2013. 2010 1040 tax form This limit increases to $52,000 for 2014. 2010 1040 tax form SIMPLE plan salary reduction contribution limit for 2013 and 2014. 2010 1040 tax form  The limit on salary reduction contributions, other than catch-up contributions, increases to $12,000 for 2013 and remains at $12,000 for 2014. 2010 1040 tax form Catch-up contribution limit remains unchanged for 2013 and 2014. 2010 1040 tax form  A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. 2010 1040 tax form The catch-up contribution limitation for defined contribution plans other than SIMPLE plans remains unchanged at $5,500 for 2013 and 2014. 2010 1040 tax form The catch-up contribution limitation for SIMPLE plans remains unchanged at $2,500 for 2013 and 2014. 2010 1040 tax form The catch-up contributions a participant can make for a year cannot exceed the lesser of the following amounts. 2010 1040 tax form The catch-up contribution limit. 2010 1040 tax form The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. 2010 1040 tax form See “Catch-up contributions” under Contribution Limits and Limit on Elective Deferrals in chapters 3 and 4, respectively, for more information. 2010 1040 tax form All section references are to the Internal Revenue Code, unless otherwise stated. 2010 1040 tax form Reminders In-plan Roth rollovers. 2010 1040 tax form  Section 402A(c)(4) provides for a distribution from an individual's account in a 401(k) plan, other than from a designated Roth account, that is rolled over to the individual's designated Roth account in the same plan. 2010 1040 tax form An in-plan Roth rollover is not treated as a distribution for most purposes. 2010 1040 tax form Section 402A(c)(4) was added by the Small Business Jobs Act of 2010 and applies to distributions made after September 27, 2010. 2010 1040 tax form For additional guidance on in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. 2010 1040 tax form R. 2010 1040 tax form B. 2010 1040 tax form 872, available at  www. 2010 1040 tax form irs. 2010 1040 tax form gov/irb/2010-51_IRB/ar11. 2010 1040 tax form html. 2010 1040 tax form In-plan Roth rollovers expanded. 2010 1040 tax form  Beginning in 2013, a plan with designated Roth accounts can permit a participant to roll over amounts into a designated Roth account from his or her other accounts in the same plan, regardless of whether the participant is eligible for a distribution from the other accounts. 2010 1040 tax form Section 402A(c)(4) was amended by the American Taxpayer Relief Act of 2012. 2010 1040 tax form For more information, see Notice 2013-74, 2013-52 I. 2010 1040 tax form R. 2010 1040 tax form B. 2010 1040 tax form 819, available at www. 2010 1040 tax form irs. 2010 1040 tax form gov/irb/2013-52_IRB/ar11. 2010 1040 tax form html. 2010 1040 tax form Credit for startup costs. 2010 1040 tax form  You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP, SIMPLE, or qualified plan. 2010 1040 tax form The credit equals 50% of the cost to set up and administer the plan and educate employees about the plan, up to a maximum of $500 per year for each of the first 3 years of the plan. 2010 1040 tax form You can choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective. 2010 1040 tax form You must have had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year. 2010 1040 tax form At least one participant must be a non-highly compensated employee. 2010 1040 tax form The employees generally cannot be substantially the same employees for whom contributions were made or benefits accrued under a plan of any of the following employers in the 3-tax-year period immediately before the first year to which the credit applies. 2010 1040 tax form You. 2010 1040 tax form A member of a controlled group that includes you. 2010 1040 tax form A predecessor of (1) or (2). 2010 1040 tax form The credit is part of the general business credit, which can be carried back or forward to other tax years if it cannot be used in the current year. 2010 1040 tax form However, the part of the general business credit attributable to the small employer pension plan startup cost credit cannot be carried back to a tax year beginning before January 1, 2002. 2010 1040 tax form You cannot deduct the part of the startup costs equal to the credit claimed for a tax year, but you can choose not to claim the allowable credit for a tax year. 2010 1040 tax form To take the credit, use Form 8881, Credit for Small Employer Pension Plan Startup Costs. 2010 1040 tax form Retirement savings contributions credit. 2010 1040 tax form  Retirement plan participants (including self-employed individuals) who make contributions to their plan may qualify for the retirement savings contribution credit. 2010 1040 tax form The maximum contribution eligible for the credit is $2,000. 2010 1040 tax form To take the credit, use Form 8880, Credit for Qualified Retirement Savings Contributions. 2010 1040 tax form For more information on who is eligible for the credit, retirement plan contributions eligible for the credit and how to figure the credit, see Form 8880 and its instructions or go to the IRS website and search Retirement Topics-Retirement Savings Contributions Credit (Saver's Credit). 2010 1040 tax form Photographs of missing children. 2010 1040 tax form  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2010 1040 tax form Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2010 1040 tax form You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2010 1040 tax form Introduction This publication discusses retirement plans you can set up and maintain for yourself and your employees. 2010 1040 tax form In this publication, “you” refers to the employer. 2010 1040 tax form See chapter 1 for the definition of the term employer and the definitions of other terms used in this publication. 2010 1040 tax form This publication covers the following types of retirement plans. 2010 1040 tax form SEP (simplified employee pension) plans. 2010 1040 tax form SIMPLE (savings incentive match plan for employees) plans. 2010 1040 tax form Qualified plans (also called H. 2010 1040 tax form R. 2010 1040 tax form 10 plans or Keogh plans when covering self-employed individuals), including 401(k) plans. 2010 1040 tax form SEP, SIMPLE, and qualified plans offer you and your employees a tax-favored way to save for retirement. 2010 1040 tax form You can deduct contributions you make to the plan for your employees. 2010 1040 tax form If you are a sole proprietor, you can deduct contributions you make to the plan for yourself. 2010 1040 tax form You can also deduct trustees' fees if contributions to the plan do not cover them. 2010 1040 tax form Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. 2010 1040 tax form Under a 401(k) plan, employees can have you contribute limited amounts of their before-tax (after-tax, in the case of a qualified Roth contribution program) pay to the plan. 2010 1040 tax form These amounts (and the earnings on them) are generally tax free until your employees receive distributions from the plan or, in the case of a qualified distribution from a designated Roth account, completely tax free. 2010 1040 tax form What this publication covers. 2010 1040 tax form   This publication contains the information you need to understand the following topics. 2010 1040 tax form What type of plan to set up. 2010 1040 tax form How to set up a plan. 2010 1040 tax form How much you can contribute to a plan. 2010 1040 tax form How much of your contribution is deductible. 2010 1040 tax form How to treat certain distributions. 2010 1040 tax form How to report information about the plan to the IRS and your employees. 2010 1040 tax form Basic features of SEP, SIMPLE, and qualified plans. 2010 1040 tax form The key rules for SEP, SIMPLE, and qualified plans are outlined in Table 1. 2010 1040 tax form SEP plans. 2010 1040 tax form   SEPs provide a simplified method for you to make contributions to a retirement plan for yourself and your employees. 2010 1040 tax form Instead of setting up a profit-sharing or money purchase plan with a trust, you can adopt a SEP agreement and make contributions directly to a traditional individual retirement account or a traditional individual retirement annuity (SEP-IRA) set up for yourself and each eligible employee. 2010 1040 tax form SIMPLE plans. 2010 1040 tax form   Generally, if you had 100 or fewer employees who received at least $5,000 in compensation last year, you can set up a SIMPLE plan. 2010 1040 tax form Under a SIMPLE plan, employees can choose to make salary reduction contributions rather than receiving these amounts as part of their regular pay. 2010 1040 tax form In addition, you will contribute matching or nonelective contributions. 2010 1040 tax form The two types of SIMPLE plans are the SIMPLE IRA plan and the SIMPLE 401(k) plan. 2010 1040 tax form Qualified plans. 2010 1040 tax form   The qualified plan rules are more complex than the SEP plan and SIMPLE plan rules. 2010 1040 tax form However, there are advantages to qualified plans, such as increased flexibility in designing plans and increased contribution and deduction limits in some cases. 2010 1040 tax form Table 1. 2010 1040 tax form Key Retirement Plan Rules for 2013 Type  of  Plan Last Date for Contribution Maximum Contribution Maximum Deduction When To Set Up Plan SEP Due date of employer's return (including extensions). 2010 1040 tax form Smaller of $51,000 or 25%1 of participant's compensation. 2010 1040 tax form 2 25%1 of all participants' compensation. 2010 1040 tax form 2 Any time up to the due date of employer's return (including extensions). 2010 1040 tax form SIMPLE IRA and SIMPLE 401(k) Salary reduction contributions: 30 days after the end of the month for which the contributions are to be made. 2010 1040 tax form 4  Matching or nonelective contributions: Due date of employer's return (including extensions). 2010 1040 tax form Employee contribution: Salary reduction contribution up to $12,000, $14,500 if age 50 or over. 2010 1040 tax form   Employer contribution:  Either dollar-for-dollar matching contributions, up to 3% of employee's compensation,3 or fixed nonelective contributions of 2% of compensation. 2010 1040 tax form 2 Same as maximum contribution. 2010 1040 tax form Any time between 1/1 and 10/1 of the calendar year. 2010 1040 tax form   For a new employer coming into existence after 10/1, as soon as administratively feasible. 2010 1040 tax form Qualified Plan: Defined Contribution Plan  Elective deferral: Due date of employer's return (including extensions). 2010 1040 tax form 4   Employer contribution: Money Purchase or Profit-Sharing: Due date of employer's return (including extensions). 2010 1040 tax form  Employee contribution: Elective deferral up to $17,500, $23,000 if age 50 or over. 2010 1040 tax form   Employer contribution: Money Purchase: Smaller of $51,000 or 100%1 of participant's compensation. 2010 1040 tax form 2  Profit-Sharing: Smaller of $51,000 or 100%1 of participant's compensation. 2010 1040 tax form 2  25%1 of all participants' compensation2, plus amount of elective deferrals made. 2010 1040 tax form   By the end of the tax year. 2010 1040 tax form Qualified Plan: Defined Benefit Plan Contributions generally must be paid in quarterly installments, due 15 days after the end of each quarter. 2010 1040 tax form See Minimum Funding Requirement in chapter 4. 2010 1040 tax form Amount needed to provide an annual benefit no larger than the smaller of $205,000 or 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. 2010 1040 tax form Based on actuarial assumptions and computations. 2010 1040 tax form By the end of the tax year. 2010 1040 tax form 1Net earnings from self-employment must take the contribution into account. 2010 1040 tax form See Deduction Limit for Self-Employed Individuals in chapters 2 and 4 . 2010 1040 tax form  2Compensation is generally limited to $255,000 in 2013. 2010 1040 tax form  3Under a SIMPLE 401(k) plan, compensation is generally limited to $255,000 in 2013. 2010 1040 tax form  4Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions and elective deferrals. 2010 1040 tax form What this publication does not cover. 2010 1040 tax form   Although the purpose of this publication is to provide general information about retirement plans you can set up for your employees, it does not contain all the rules and exceptions that apply to these plans. 2010 1040 tax form You may also need professional help and guidance. 2010 1040 tax form   Also, this publication does not cover all the rules that may be of interest to employees. 2010 1040 tax form For example, it does not cover the following topics. 2010 1040 tax form The comprehensive IRA rules an employee needs to know. 2010 1040 tax form These rules are covered in Publication 590, Individual Retirement Arrangements (IRAs). 2010 1040 tax form The comprehensive rules that apply to distributions from retirement plans. 2010 1040 tax form These rules are covered in Publication 575, Pension and Annuity Income. 2010 1040 tax form The comprehensive rules that apply to section 403(b) plans. 2010 1040 tax form These rules are covered in Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). 2010 1040 tax form Comments and suggestions. 2010 1040 tax form   We welcome your comments about this publication and your suggestions for future editions. 2010 1040 tax form   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2010 1040 tax form NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2010 1040 tax form Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2010 1040 tax form   You can send your comments from www. 2010 1040 tax form irs. 2010 1040 tax form gov/formspubs. 2010 1040 tax form Click on “More Information” and then on “Give us feedback. 2010 1040 tax form ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2010 1040 tax form Ordering forms and publications. 2010 1040 tax form   Visit www. 2010 1040 tax form irs. 2010 1040 tax form gov/formspubs to download forms  and publications, call 1-800-TAX-FORM  (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 2010 1040 tax form Internal Revenue Service 1201 N. 2010 1040 tax form Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2010 1040 tax form   If you have a tax question, check the information available on IRS. 2010 1040 tax form gov or call 1-800-829-1040. 2010 1040 tax form We cannot answer tax questions sent to either of the above addresses. 2010 1040 tax form Note. 2010 1040 tax form Forms filed electronically with the Department of Labor are not available on the IRS website. 2010 1040 tax form Instead, see www. 2010 1040 tax form efast. 2010 1040 tax form dol. 2010 1040 tax form gov. 2010 1040 tax form Prev  Up  Next   Home   More Online Publications